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FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 12 Months Ended
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Dec. 31, 2021
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS [Abstract] |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | NOTE 12:FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS The Company makes certain disclosures as detailed below with regard to financial instruments, including derivatives. These disclosures include, among other matters, the nature and terms of derivative transactions, information about significant concentrations of credit risk and the fair value of financial assets and liabilities. A. Non-Designated Exchange Rate Transactions As the functional currency of Tower is the USD and part of Tower’s expenses are denominated in NIS, Tower enters into exchange rate agreements from time to time to partially protect against the volatility of future cash flows caused by changes in foreign exchange rates on NIS-denominated expenses. As of December 31, 2021, the fair value amounts of such exchange rate agreements were $2,134 in an asset position, presented in other current assets with a face value of $67,500. As of December 31, 2020, the fair value amounts of such exchange rate agreements were $5,143 in an asset position, presented in other current assets with a face value of $51,000. Changes in the fair values of such derivatives are presented in the statements of operations. As the functional currency of the Company is the USD and part of TPSCo revenues and expenses are denominated in JPY, the Company enters into exchange rate agreements from time to time to protect against the volatility of future cash flows caused by changes in foreign exchange rates on JPY-denominated amounts. As of December 31, 2021, and 2020, the fair value amounts of such exchange rate agreements were $3,040 in a liability position and $150 in an asset position, respectively, presented in other current liabilities and other current assets, respectively, with a face value of $164,000 and $40,000, respectively. Changes in the fair value of such derivatives are presented in the statements of operations. B.Concentration of Credit Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, bank deposits, marketable securities, derivatives, trade receivables and government and other receivables. The Company's cash, deposits, marketable securities and derivatives are maintained with large and reputable banks and investment banks. The composition and maturities of investments are regularly monitored by the Company. Generally, these securities may be redeemed upon demand and bear minimal risk. The Company generally does not require collateral for insurance of receivables; However, in certain circumstances, the Company obtains credit insurance or may require advance payments. An allowance for current expected credit losses is maintained with respect to trade accounts receivables and marketable securities. The Company performs ongoing credit evaluations of its customers. C.Fair Value of Financial Instruments The estimated fair values of the Company’s financial instruments, excluding debentures, do not materially differ from their respective carrying amounts as of December 31, 2021 and 2020. The fair value of debentures, based on quoted market prices as of December 31, 2021 and 2020, was approximately $66,000 and $107,000, respectively, compared to carrying amounts of approximately $64,000 and $102,000, for the above dates, respectively. D.Designated Cash Flow Hedge Transactions The Company entered into designated cash flow hedging transactions using a cross-currency swap to mitigate the foreign exchange rate differences on principal and interest arising from the Series G Debentures’ denomination in NIS. As of December 31, 2021, the fair value of the swap was $12,560 in an asset net position, of which $8,188 was presented in other current assets and $4,372 was presented in long-term assets. As of December 31, 2020, the fair value of the swap was $16,977 in an asset net position, of which $6,316 was presented in other current assets and $10,661 was presented in long-term assets. As of December 31, 2021 and December 31, 2020, the effective portions of $27 income and $323 loss, respectively, were recorded in OCI, of which a loss of $56 is expected to be recorded in earnings during the twelve months ending December 31, 2022. For the years ended December 31, 2021 and December 31, 2020, the hedging effect of the swap on the Company’s results of operations was income of $542 and $5,252, respectively, and was recognized as financing income, to offset the effect of the rate difference related to the Series G Debentures. E.Fair Value Measurements Valuation Techniques In general, and where applicable, the Company uses quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing methodology applies to the Company’s Level 1 assets and liabilities. If quoted prices in active markets for identical assets and liabilities are not available to determine fair value, the Company uses quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable, either directly or indirectly. This pricing methodology applies to the Company’s Level 2 and Level 3 assets and liabilities. Level 1 Measurements Securities classified as available-for-sale are reported at fair value on a recurring basis. These securities are classified as Level 1 of the valuation hierarchy where quoted market prices from reputable third-party brokers are available in an active market. Changes in fair value of securities available-for-sale are recorded in other comprehensive income. Level 2 Measurements If quoted market prices are not available, the Company obtains fair value measurements of similar assets and liabilities from an independent pricing service. These securities are reported using Level 2 inputs and the fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, U.S. government and agency yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other factors. For cross-currency swap measured under Level 2, the Company uses the market approach using quotations from banks and other public information. Level 3 Measurements Investments in equity securities of privately-held companies without readily determinable fair values are measured using the Measurement Alternatives (see Note 2I). The Company reviews these investments for impairment and observable price changes on a quarterly basis and adjusts the carrying value accordingly. For the year ended December 31, 2021, the Company recorded a decrease of $2,963 in the value of such investments, and for the year ended December 31, 2020, the Company recorded an increase of $358 in the value of such investments, presented in other income (expense), net in the statements of operations. Recurring fair value measurements using the indicated inputs:
Details |  | December 31, 2021 |  |  | Quoted prices in active market for identical liability (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Cross-currency swap - net asset position |  | $ | 12,560 |  |  | $ | -- |  |  | $ | 12,560 |  |  | $ | -- |
Privately held companies |  |  | 15,155 |  |  |  | -- |  |  |  | -- |  |  |  | 15,155 |
Marketable securities held for sale |  |  | 190,068 |  |  |  | 190,068 |  |  |  | -- |  |  |  | -- |
Foreign exchange forward and cylinders - net liability position |  |  | (906 | ) |  |  | -- |  |  |  | (906 | ) |  |  | -- |
|  | $ | 216,877 |  |  | $ | 190,068 |  |  | $ | 11,654 |  |  | $ | 15,155 |
Details |  | December 31, 2020 |  |  | Quoted prices in active market for identical liability (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Cross-currency swap - net asset position |  | $ | 16,977 |  |  | $ | -- |  |  | $ | 16,977 |  |  | $ | -- |
Privately held companies |  |  | 17,727 |  |  |  | -- |  |  |  | -- |  |  |  | 17,727 |
Marketable securities held for sale |  |  | 188,186 |  |  |  | 188,186 |  |  |  | -- |  |  |  | -- |
Foreign exchange forward and cylinders - net asset position |  |  | 5,293 |  |  |  | -- |  |  |  | 5,293 |  |  |  | -- |
|  | $ | 228,183 |  |  | $ | 188,186 |  |  | $ | 22,270 |  |  | $ | 17,727 |
F.Short-Term and Long-Term Deposits and Marketable Securities Deposits and marketable securities as of December 31, 2021 included short-term deposits in the amount of $363,648, marketable securities with applicable accrued interest in the amount of $190,068 and a long-term bank deposit in the amount of $12,500; as of December 31, 2020, deposits and marketable securities included short-term deposits in the amount of $310,230, marketable securities with applicable accrued interest in the amount of $188,967 and a long-term bank deposit in the amount of $12,500. The following table summarizes amortized costs, gross unrealized gains and losses and estimated fair values of available-for-sale marketable securities as of December 31, 2021:
Details |  | Amortized Cost (*) |  |  | Gross unrealized gains |  |  | Gross unrealized losses |  |  | Estimated fair value |
Corporate bonds |  | $ | 161,491 |  |  | $ | 1,453 |  |  | $ | (1,311 | ) |  | $ | 161,633 |
Government bonds |  |  | 27,332 |  |  |  | 1 |  |  |  | (399 | ) |  |  | 26,934 |
Municipal bonds |  |  | 472 |  |  |  | -- |  |  |  | -- |  |  |  | 472 |
Certificate of deposit |  |  | 248 |  |  |  | 5 |  |  |  | -- |  |  |  | 253 |
|  | $ | 189,543 |  |  | $ | 1,459 |  |  | $ | (1,710 | ) |  | $ | 189,292 |
* Excluding accrued interest of $776. The scheduled maturities of available-for-sale marketable securities as of December 31, 2021, were as follows:
Details |  | Amortized Cost |  |  | Estimated fair value |
Due within one year |  | $ | 22,547 |  |  | $ | 22,637 |
Due within 2-5 years |  |  | 127,576 |  |  |  | 126,510 |
Due after 5 years |  |  | 39,420 |  |  |  | 40,145 |
|  | $ | 189,543 |  |  | $ | 189,292 |
The following table summarizes amortized costs, gross unrealized gains and losses and estimated fair values of available-for-sale marketable securities as of December 31, 2020:
Details |  | Amortized cost (*) |  |  | Gross unrealized gains |  |  | Gross unrealized losses |  |  | Estimated fair value |
Corporate bonds |  | $ | 154,577 |  |  | $ | 1,207 |  |  | $ | (735 | ) |  | $ | 155,049 |
Government bonds |  |  | 32,894 |  |  |  | 37 |  |  |  | (53 | ) |  |  | 32,878 |
Certificate of deposit |  |  | 248 |  |  |  | 11 |  |  |  | -- |  |  |  | 259 |
|  | $ | 187,719 |  |  | $ | 1,255 |  |  | $ | (788 | ) |  | $ | 188,186 |
* Excluding accrued interest of $781. The scheduled maturities of available-for-sale marketable securities as of December 31, 2020, were as follows:
Details |  | Amortized Cost |  |  | Estimated fair value |
Due within one year |  | $ | 22,772 |  |  | $ | 22,800 |
Due within 2-5 years |  |  | 138,894 |  |  |  | 139,210 |
Due after 5 years |  |  | 26,053 |  |  |  | 26,176 |
|  | $ | 187,719 |  |  | $ | 188,186 |
Investments with continuous unrealized losses for less than twelve months and twelve months or more and their related fair values as of December 31, 2021 and December 31, 2020, were as indicated in the following tables:
|  | December 31, 2021 |
|  | Investment with continuous unrealized losses for less than twelve months |  |  | Investments with continuous unrealized losses for twelve months or more |  |  | Total investments with continuous unrealized losses |
Details |  | Fair value |  |  | Unrealized losses |  |  | Fair value |  |  | Unrealized losses |  |  | Fair value |  |  | Unrealized losses |
Corporate bonds |  | $ | 87,495 |  |  | $ | (1,129 | ) |  | $ | 11,182 |  |  | $ | (182 | ) |  | $ | 98,677 |  |  | $ | (1,311 | )
Government bonds |  |  | 13,117 |  |  |  | (164 | ) |  |  | 10,725 |  |  |  | (235 | ) |  |  | 23,842 |  |  |  | (399 | )
Total |  | $ | 100,612 |  |  | $ | (1,293 | ) |  | $ | 21,907 |  |  | $ | (417 | ) |  | $ | 122,519 |  |  | $ | (1,710 | )
|  | December 31, 2020 |
|  | Investment with continuous unrealized losses for less than twelve months |  |  | Investments with continuous unrealized losses for twelve months or more |  |  | Total investments with continuous unrealized losses |
Details |  | Fair value |  |  | Unrealized losses |  |  | Fair value |  |  | Unrealized losses |  |  | Fair value |  |  | Unrealized losses |
Corporate bonds |  | $ | 24,699 |  |  | $ | (700 | ) |  | $ | 9,434 |  |  | $ | (35 | ) |  | $ | 34,133 |  |  | $ | (735 | )
Government bonds |  |  | 12,430 |  |  |  | (50 | ) |  |  | 1,497 |  |  |  | (3 | ) |  |  | 13,927 |  |  |  | (53 | )
Total |  | $ | 37,129 |  |  | $ | (750 | ) |  | $ | 10,931 |  |  | $ | (38 | ) |  | $ | 48,060 |  |  | $ | (788 | )

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